The defining characteristic of a bank is not only it demands deposits in order to write loans. Banks are refer to lending institutions that intermediate (they compete for deposits to write loans) and subsequently, they hold two legal commitments across their balance sheets (equity, traded on the stock exchange and deposits) and hold exchange settlement accounts with Reserve Bank of Australia, the Australia’s central bank. ESAs streamline the settlement of interbank transactions. Bank that acquires the rival bank cheques are presented to the clearinghouse for redemption. After processing, the net balances are posted on ESAs. Bank that accumulate adverse balances observe a fall in the ESA and creditor bank observe an increase in ESA balances.

Banks do not only do business in retail banking market where they supply deposits and buy consumer and commercial loan. They pay competitive interest rate on liabilities and earn interest on assets. Besides, banks also involve in wholesale banking market by trading in money market. They buy corporate and government securities and issue their own type of security called certificates of deposits (CDs). Moreover, banks also provide other services and products such as insurance. They provide broader range of services can be explained by growing preference of one stop shopping and economies of scale.

Other the other hand, banks acts as financial intermediaries where they solve the problems that savers would face if they invest in corporate equities and securities such as liquidity cost, price risk and agency cost. For example, bank deposits from saver can be withdrawn on demand and full value of the deposits can be redeemed which overcome the liquidity risk and price risk that an investor would face if he invests in corporate sector.

Furthermore, banks also act as asset transformers when they perform liquidity transformation and maturity transformation. Agency cost can be alleviated when savers delegate the banks the...

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...﻿Characteristics / Features of a Bank
1. Dealing in Money: A bank is a financial institution which deals with other people's money i.e. money given by depositors.
2. Acceptance of Deposit: A bank accepts money from the people in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers.
3. Giving Advances: A bank lends out money in the form of loans to those who require it for different purposes.
4. Payment and Withdrawal: A bank provides easy payment and withdrawal facility to its customers. It also brings bank money in circulation. This money is in the form of cheques, drafts, etc.
5. Agency and Utility Services: A bank provides various banking facilities to its customers. They include general utility services and agency services.
6. Profit and Service Orientation: A bank is a profit seeking institution having service oriented approach.
7. Ever increasing Functions: Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services and activities of a bank.
8. Connecting Link: A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money...

...﻿FPT SCHOOL OF BUSINESS
CLass: FB0605
BANK OF AMERICA
& BANK OF CHINA Hong Kong
(Chose two banks to compare their capital risk )
Ta Quang Tuan
FB00479
I. Introduction
1. A brief conceptual overview of capital risk
For bankers and many of their competitors the word capital has a special meaning. It refers principally to the funds contributed by the owners of a financial firm. In the case of a bank this means the stockholders—investors in the common and preferred stock that a financial firm has issued. In the case of banking’s closest competitors, the thrift institutions, the “owners” may be stockholders if the thrift is a corporation or may be its customers in the case of a credit union or mutual savings bank. So “Capital risk “ is the risk that a company or a investor will lose the amount of an investment. An investor takes on capital risk each time he invests in anything other than a risk-free security. Capital risk is limited to the amount one has invested.
a, Role of bank capital
Capital performs such indispensable functions as supplying resources to start a new financial firm, creating a base of resources for future growth, providing a cushion of protection against risk, and promoting public confidence in the long-term viability of a financial firm. Moreover, capital has become the centerpiece of supervision and regulation today—the lever that...

...﻿CHAPTER 13
The Euromarkets
EASY (definitional)
13.1 The dominant currency of the Eurocurrency markets is the
a) U.S. dollar
b) Euro
c) Yen
d) Pound
Ans: a
Section: The Eurocurrency market
Level: Easy
13.2 Eurodollar deposits represent the liabilities of
a) European non-financial corporations
b) the Organization of Petroleum Exporting Countries (OPEC)
c) European banks and U.S. bank branches abroad
d) European banks exclusively
Ans: c
Section: The Eurocurrency market
Level: Easy
13.3 The supply of Eurodollar deposits is the result of
a) Federal Reserve Board policy
b) World Bank policy
c) a resolution of the member governments of the Organization of Economic Cooperation and Development (OECD)
d) depositors holding dollars in non-US banks
Ans: d
Section: Modern origins
Level: Easy
13.4 In recent years, the Eurocurrency market has grown _______ the Eurobond market.
a) more slowly than
b) at about the same rate as
c) much more rapidly than
d) with no clear pattern emerges relative to
Ans: a
Section: Modern origins
Level: Easy
13.5 The period over which the borrower may take down a Eurocurrency loan is known as the _______.
a) maturity of the loan
b) LIBOR rate
c) Drawdown
d) Margin
Ans: c
Section: Eurocurrency loans
Level: Easy
13.6 Another name for the spread in a Eurocurrency loan is the _______.
a) drawdown
b) term
c) LIBOR rate
d) Margin...

...F209
A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank links together customers that have capital deficits and customers with capital surpluses.
Due to their importance in the financial system and influence on national economies, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking, under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.
"A banker ... is a trader who buys money, or money and debts, by creating other debts, which he does with his credit - exchanging for a debt payable in the future one payable on demand…………….. the United States Supreme Court (Austen)
"A banker (is) a dealer in capital, or, more properly, a dealer in money. He is an intermediate party between the borrower and the lender. He borrows of one party and lends to another."……….. the United States Supreme Court (Austen)
Banking: In general terms, the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn...

...Commercial banking activity
BLF is an old established leading bank in Corporate Banking and an active professional provider of quality services to the Lebanese and regional markets. Our specialized team covers all segments of the business and is fully dedicated and committed to present our clients with needed advisory and adapted solutions to their requirements.
Commercial banking activities are carried out through two main commercial divisions: the small and middle market banking division and the corporate banking division:
* the small and middle market banking division covers small or
medium-sized businesses, with a credit exposure of up to USD 1.5 million and / or an annual turnover of less than USD 10 million.
* the corporate banking division covers largest clients in terms of sales turnover or facilities extended. Corporate clients are currently defined as those with a sales turnover exceeding USD 10 million and / or whose banking facilities at the bank exceed USD 1.5 million.
Corporate division is divided into five units focusing on different economic sectors: the general trading and food retail unit, the general contracting and real estate unit, the international trading, services and insurance unit, the industries unit; and the syndicated, subsidized and special loans unit. In addition to the primary products and services, the small and middle market banking division and the corporate banking division provide advisory...

...Risks in Banking
|Banking, by its nature, entails taking a wide array of risks. Banking supervisors need to understand these risks and be satisfied that banks|
|are adequately measuring and managing them. The key risks faced by banks are discussed below. |
|Credit risk |
|The extension of loans is the primary activity of most banks. Lending activities require banks to make judgements related to the |
|creditworthiness of borrowers. These judgements do not always prove to be accurate and the creditworthiness of a borrower may decline over |
|time due to various factors. Consequently, a major risk that banks face is credit risk or the failure of a counterparty to perform according|
|to a contractual arrangement. This risk applies not only to loans but to other on- and off-balance sheet exposures such as guarantees, |
|acceptances and securities investments. Serious banking problems have arisen from the failure of banks to recognise impaired assets, to |
|create reserves for writing off these assets, and to suspend recognition of interest income when appropriate. |
|Large exposures to a single borrower, or to a group of related borrowers are a common cause of...

...of the Study
The subject of the paper is the review of basic terms of Central Bank, it’s monetary policy and issues facing Central Banks. The evolution of central banks as key players in economic affairs has a colorful history embodying over two centuries of economic and political thought. Central bank supervises and regulated the banking system and the whole financial sector. The primary function of a central bank is to provide the nation's money supply, but more active duties include controlling interest rates and acting as a lender of last resort to the banking sector during times of financial crisis. It may also have supervisory powers, to ensure that banks and other financial institutions do not behave recklessly or fraudulently.
The topicality of the Chosen Problem
From humble beginnings in the seventeenth century, central banks have risen to be at the apex of the financial institutional structure of national economies. They are pre-eminent in the conduct of monetary policy and play a dominant role in ensuring financial stability. Increasingly, the functions of central banks are taking on an international perspective, as a result of the growing integration of financial markets. Central banks have a wide range of responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation...